Is Manhattan for Everyone? The pied-à-terre and the ‘poor door’

Seven years ago, when the Westside mega-development known as Hudson Yards was but a twinkle in the collective eye of real estate moguls and Bloomberg officiates, grumbling had already begun about inequality among the neighborhood’s residents. Those residents, of course, had yet to arrive. And the complaints seemed stranger still given that Hudson Yards had, in a sense, been designed to incorporate inequality—intermingling housing for middle and lower earners with homes for the wealthy.

Almost a quarter—nearly 5,000—of the 20,000 residential units planned for the 42-square block development were to be priced below market-rate.

But Community Board 4, whose purview includes Hudson Yards, was concerned with manner as well as quantity. They condemned plans from Silverstein Properties to attach an addition containing 83 affordable units to one of two luxurious 57-story buildings slated for West 42nd Street and Eleventh Avenue. “As planned, it will look and feel like the maids’ quarters for the rest of the project,” the group wrote in a letter to the city, which asked that Silverstein be denied the density bonus the firm was seeking in exchange for the affordable units. (Such a bonus might be used to add more market-rate units or sold to another developer.)

The effort failed. Today Silver Towers, complete with affordable appendage, take up much of the block. On a recent afternoon, stylishly dressed couples and small groups of friends on the hunt cycled through the lobby, into and out of elevators, and back across a spiffy “arrivals court,” bound for their next listing. Among the available luxury units at Silver Towers were a two bedroom going for $8,690 a month and a studio for $2,990, up-market a piece from Manhattan’s current $3,800 overall average.

As Community Board 4 suggested, the affordable addition—which stands at the back corner of the south tower—is less than grand. Its 13 stories appear squat beside the soaring towers and its windows look onto the back of the Michael J. Quill MTA bus depot. Where the luxury portion of the building boasts a sleek, loungy lobby, the addition has a FOB-operated doorway on 41st Street, which opens on a dim cinderblock hall whose motif shares something with YMCA locker rooms.

In May, the Daily News columnist Juan Gonzalez cited Silver Towers’ “separate and unequal” facilities as a banner example of what he considered Mayor Bloomberg’s excessive servility to real estate developers. It was a call that seemed to anticipate Bill de Blasio’s anti-inequality crusade.

During the previous administration, the mayor has suggested, as rising prices and the modification and subsequent collapse of public housing programs forced New Yorkers from their neighborhoods, developers like Larry Silverstein benefited handsomely from aggressive rezoning, while making questionable contributions to the affordable housing stock.

In areas newly-rezoned for residential construction—in Hudson Yards, along the waterfront in Williamsburg and elsewhere—developers were offered tax breaks, subsidies and density bonuses in exchange for including affordable units in their projects. But the agreements were optional. Many developers failed to see the upside and didn’t participate.

The current mayor aims to change that. He has vowed to produce or preserve 200,000 units of affordable housing over the course of 10 years. Though no details will appear until May, one thing seems clear: he intends to replace Mayor Bloomberg’s incentive-based policy—known as a “voluntary inclusionary” model—with a “guaranteed inclusionary” model. Developments that take advantage of rezoning will contain affordable units by requirement rather than as an elective trade item. There will be no opting out.

“What we need,” Mr. de Blasio said in an interview with Salon, “is a muscular approach that says: If you’re going to do development in this city, you must agree up front to create affordable housing. It must be built simultaneously. That is the price of admission.” (That is, of course, if Mr. de Blasio can find legal recourse for the change; it’s possible that he will face a challenge under the 1971 Urstadt Law, which bars the city from enacting rent control regulations stricter than the state’s.)

Some developers have warned that if the new policies prove too forceful; they might become reluctant to build in New York at a time when the city badly needs it—taking their talents to more hospitable locales.

“If you tell people what to do, people will stop building,” one prominent developer told The Observer. “For the last 12 years, we had Bloomberg, a smart business guy making apolitical decisions. Now, some people are really nervous.”

A rendering of Hudson Yards, where Silverstein Properties attached an affordable addition to the luxurious Silver Towers

By any metric, Mayor Bloomberg succeeded in meaningfully contributing to the affordable housing supply, creating or preserving some 165,000 units. Even his fiercest critics have applauded.

Benjamin Dulchin, executive director of the Association for Neighborhood and Housing Development, who has said that Mr. Bloomberg “gave away the store” to developers, told us that his effort was nonetheless “really quite remarkable, a very impressive thing, for all its flaws.” Mr. Bloomberg was effective in preserving many affordable units but faltered, housing advocates say, in his reluctance to yoke the demand for market-rate housing, and its attendant construction, to new affordable development. (Roughly two thirds of Mr. Bloomberg’s 165,000 total consisted of preservation, which refers to physical repair and the maintenance of existing affordability in units that would otherwise be loosed into the market.)

“Bloomberg said, ‘We’ll just unleash the energy of the private market and it will address the issue,’” Mr. Dulchin continued. Through rezoning areas previously limited to industrial use, the former mayor allowed for denser, sky-scraping construction. (Silverstein, for example, acquired the Silver Towers site in 1984 when it was zoned industrial, and sat on it until 2005 when the Hudson Yards rezoning made it eligible for residential construction.) Mr. Dulchin said that Mr. Bloomberg thus “dramatically increased the value of land with the stroke of a pen. But the voluntary mechanism didn’t work; the city simply became more densely packed with luxury buildings.”

Even within the context of Mr. Bloomberg’s system, regulation and enforcement were often insufficiently rigorous. As luxury skyscrapers rose, evidence emerged that some developers were playing fast and loose with incentives. In some cases, developers received tens of millions of dollars in 421-a tax abatements—intended to spur affordable construction—for opulent buildings like Extell Development’s One57, where a penthouse contracted for more than $90 million, and Silverstein’s Four Seasons condo hotel, which were not technically eligible for them.

Further evidence suggests that developers ostensibly participating according to the letter of the law in Mr. Bloomberg’s inclusionary program did not adhere to its requirements. According to an August report from the office of Councilman Brad Lander, between 2008 and 2013, only 2,769 of units built as a result of higher-density rezonings were affordable, 36 percent fewer than the mayor’s program ought to have ensured.

Sometimes, affordable units are the last to arrive. In May, protestors in Williamsburg and Greenpoint complained of seemingly indefinite delays to promised affordable housing construction. And similar concerns arose in Hudson Yards, where some 25 percent of of total units were due to be affordable, but as of that month, only 16 percent were. Having secured lucrative incentive packages, developers were allowed to deliver tiny studio apartments, useless to families, to fulfill affordable square footage obligations.

Whatever mechanism of inclusion Mayor de Blasio implements, it is unlikely on its own to address the inconsistencies and manipulations to which Mr. Bloomberg’s model fell prey.

Even the term “affordable” has become problematic, largely disconnected from its everyday use. In the phraseology of development schedules, whether and to what degree a dwelling is “affordable” depends on its price vis-à-vis the city’s AMI, or average median income. (In 2013, AMI for a family of four was $85,900.) And under Bloomberg, some two thirds of new units designated affordable were in reach—practically speaking—only to families making more than 50 percent of the AMI.

Together with other factors, that shortage caused New Yorkers earning less to slide increasingly into a badly strained shelter system. Taxpayers meanwhile found themselves in the odd position of subsidizing “moderate to middle income programs” for people making as much as 175 percent of the AMI—$105,350 for an individual, $150,325 for a family of four. People who, virtually anywhere else in the country, would be considered upper middle class and who could, most assuredly, afford unsubsidized housing in more modest parts of town. (Atlantic Yards has drawn flak for devoting a majority of its first “affordable” apartments—projected to rent for $2,180 to $2,740 a month—to tenants making 120 to 150 percent of the AMI.)

Another Hudson Yards property that found itself in the crosshairs of the Daily News columnist Juan Gonzalez, Related Companies’ MIMA apartments, features 200 luxury condominiums as well as 163 affordable rental units. (Mr. Gonzalez criticized the size of MIMA’s affordable apartments, which averaged just 539 square feet, and of which more than half were studios.) And 40 Riverside Boulevard, co-developed by Extell and the Carlyle Group on the Upper West Side, will have 200 upscale condos and 55 affordable units for rent.

The Riverside building occasioned uproar in August when it was revealed that renters would have a separate entrance at the building’s rear, while condo owners enjoyed a lobby facing the Hudson River. Christine Quinn, then City Council Speaker and a mayoral candidate, declared that she would not “stand for this or discrimination of any kind,” that the arrangement would “negate the inclusiveness” that Mayor Bloomberg’s policy sought to foster.

But the zoning code appeared to bear out the developers’ plans and the building will not be the first in the city to utilize so-called “poor door” architecture.

Structures like Silver Towers and 40 Riverside Boulevard can make queasy portraits of the same disparities that they aim to assuage, throwing into relief the city’s income gaps. It’s not clear, though, that uncomfortable juxtapositions of wealth—and its attendant snobbery—with tenants living in more modest circumstances negate the sort of inclusiveness that affordable housing programs seek.

Should we expect that subsidized renters be “included” in amenity and fitness packages accorded residents paying full fare? Should we feel upset that less expensive apartments have a view of the bus stop and not of the river?

In practice, indulging such grievances might well exhaust negotiating partners and undermine larger goals; that a design makes an easy target for caricature does not mean that the caricature tells a deep truth. It may actually be misleading.

If we are going to ask that developers cede profits on their most valuable holdings, if we insist that those who cannot afford the going rates in Manhattan nonetheless have the right to live there, we may need to acclimate to such uneasy arrangements. Buildings like Silver Towers and 40 Riverside Boulevard do not, after all, bolster imparity; they merely show us what is already there.

Work in progress at 40 Riverside Boulevard. Not pictured: the ‘poor door’.

Virtually every member of the real estate community with whom we spoke professed a certain sense of noblesse oblige on the subject of affordable housing.

Many developers, however, declined to be interviewed on the subject, and some spoke only on the condition of anonymity. One was particularly candid about the best course of action for the new mayor: “Just get out of the fucking way.”

“The fact that the city has become unaffordable is a sign of progress,” he said. “It’s what we call a good problem.”

It is not difficult to imagine, how over the last 12 years, that perspective solidified. In Mayor Bloomberg’s reckoning, free-market practice often seemed to warrant rewards both monetary and karmic: “I’m sorry I created so many jobs,” the developer said sarcastically. “I’m sorry so many people want to live here.”

If jarring, his formulations are not without substance. According to a recent analysis by the Real Estate Board of New York, “property taxes from income-producing real estate and other real estate related taxes…represent 34 percent of the total taxes collected or $14.525 billion…for fiscal year 2014,” more than sales and personal income taxes combined and “the largest portion of locally generated taxes” in the city’s budget. REBNY further estimated that the industry employed roughly 65,000 members—about 45 percent—of the largest property service workers union in the country, to say nothing of its payments to the construction business.

To some, these contributions appear sufficient. Gary Barnett has gone so far as to call his work on 57th Street “a gift to New York.” In truth, though, New York has been a gift to Mr. Barnett. The value of the buildings he sells is only very marginally the result of his efforts, and his posture to some extent recalls the “We Built It” sloganeering of the 2012 Republican presidential campaign, which positioned entrepreneurs as unassisted captains of their success.

Given the literal monuments their work creates, we can forgive a dose of hubris from developers. There is something god-like about shaping the skyline and anyone might be flattered by all that limestone and steel. Still, the man who sells luxury boxes at Yankee Stadium should not be mistaken for the one who invented baseball.

Despite the enormous sums developers deposit in city coffers, advocates—and even some real estate executives—insist on builders’ responsibility to provide affordable housing throughout the city, even in Manhattan’s most expensive precincts. It is there, after all, that undeveloped land contains the most potential economic energy, some of which might be siphoned off to ensure that all the people required to make Manhattan interesting and functional have the opportunity to live there. Failing to do so would seem to make a kind of enormous maid’s quarters of the outer boroughs.

Preserving affordability in Manhattan also inspires a more poetic defense. Long famous for competitiveness and grit, the island has been emblematic of a hard-won, particularly American kind of social mobility lately in decline. And to exclude those who have not already “made it”—and in only the most remunerative of professions—would appear to admit large-scale philosophical defeat.

Amid New York’s hyper-capitalist ethos, though, these arguments sound a dissonant chord. We don’t ask Hermes to produce cheap polyester ties, or Thomas Keller to offer a dollar menu at Per Se. Why should Manhattan developers forgo profits on their most valuable holdings? Why shouldn’t those who can’t afford the going rates in Manhattan just live somewhere else?

The Edge, in Williamsburg, also has a separate entrance for subsidized tenants.

Jonathan Rose, president of Jonathan Rose Companies, a major builder of affordable housing in New York and across the country, told us that a strict application of guaranteed inclusionary policy—in addition to fostering tense neighborly relations—might be economically impractical. “The developer should always have a buy-out option,” he said. “I’ve seen that strategy be really effective.”

As an alternative to building affordable units on site at a market-rate development, developers might pay into a fund that could fuel construction in other, less pricey parts of the city. The New York City Housing Trust Fund, for example—which was founded in 2006 with $130 million from the Battery Park City Authority—has helped to rehabilitate neighborhoods in outer boroughs. (Battery Park City itself contains no affordable housing.) Under another, now defunct program, 15 Central Park West—arguably Manhattan’s most prestigious new construction of recent years—received size, height and density bonuses in exchange for building supportive housing in Morningside Heights.

During Mayor Bloomberg’s tenure, however, developers taking advantage of inclusionary incentives could build off site only if the units stood no more than a half-mile away or within the same community board. The provision sought to ensure access in “generally desirable” neighborhoods for lower-income residents to high-quality public services—particularly education—associated with improving social mobility. Developers could not fulfill their affordable obligations for market rate construction in the West Village, say, with low-income units in Gowanus.

For the price of a single apartment in a prime Manhattan neighborhood, though, several might be had in vibrant and viable—if more modest—communities, like Bay Ridge or Jackson Heights. “Is it better to have one affordable unit in a very fancy building?” Mr. Rose said. “Or four affordable units elsewhere?”

One problem, according to Vishaan Chakrabarti, is that the focus on high-density luxury buildings in Manhattan overlooks opportunities in other boroughs. “We need to use the economic juggernaut that is New York City to solve our social mobility problem,” he said recently. “The major thing you have to do is harness land values.”

A principal at SHoP Architects and director of Columbia’s Center for Urban Real Estate, Mr. Chakrabarti served previously in the department of city planning and as an executive vice president with Related Companies. When we met in SHoP’s office near City Hall, whose dark hardwood floors, ping-pong table and sleek architectural models suggested a marriage of Silicon Valley sensibilities and Brooklyn chic; he spoke with the animated precision of a TED talk lector.

The depth of the affordability crisis is such and the efforts to solve it have for so long proven insufficient, that planners and advocates sometimes seem to be throwing everything at the wall to see what sticks. In contrast, Mr. Chakrabarti’s prescriptions generally follow a discernible pattern: Semi-self-contained, large-scale, mixed-use developments housing residents from a variety of economic strata.

(It is no coincidence, perhaps, that SHoP is responsible for designs of three such projects currently under development: The Domino Sugar Factory in Brooklyn—which is slated for 30 percent affordability—and Essex Crossing on the Lower East Side and Atlantic Yards, which have each been advertised as 50 percent affordable.)

“Manhattan is not the future for the kinds of essential high-density housing we need,” Mr. Chakrabarti said. “Queens, in many ways, is the future. Would you rather house one family in Manhattan, or four in the Bronx? The city does not have to be Manhattan-centric.”

In Queens, Staten Island and the Bronx, developments on the model of an Essex Crossing might be repeated. Lacking Manhattan’s spatial constraints, and “brownstone” Brooklyn’s historical fabric—and pugnacious community boards—less-storied neighborhoods could be positioned to help absorb the city’s growing population, bolstering both affordable and market-rate stocks.

It is unclear, though, how existing communities in outer boroughs would react to encroaching mega-developments, or whether the less valuable land there can be leveraged in the same way as space in Manhattan and Brooklyn to produce affordable housing. More vexing still: the extent to which public transportation has been designed to shuttle people to, from and around Manhattan.

Mr. Chakrabarti envisions considerable self-sufficiency among these new developments—residents could work, live and play within the space of a few blocks—but that model, set off in relative isolation, does not much resemble what we tend to think of as New York City. And given the sorry progress of the Second Avenue subway, it is hard to picture a near future in which the connectivity necessary to make such a model viable will be operational.

Hudson Yards has drawn criticism for the size and design of its affordable units.

Though Mayor de Blasio’s plans remain vague, it is difficult to accept—both practically and ethically—that developers will cease building in Manhattan if and when they are forced to create affordable units beside luxury ones.

Last year’s fourth quarter saw a nearly 45 percent increase in Manhattan’s average new development contract price compared to 2012—a new apartment in Manhattan will now run you about $2.69 million on average. Industry analysts have attributed pricing to limited supply and “extreme pent-up demand,” which, of course, suggests great potential for further profit. It causes little surprise, then, that several city developers, including Richard LeFrak, Stephen Ross and Jerry Speyer appeared on Forbes’ latest list of the country’s 400 wealthiest residents.

One housing advocate chuckled when we asked him about the possibility. “You do need balance,” he allowed. “You don’t want to get to a place where developers are very resistant.” In the event that they find profits unacceptably reduced, though, they are of course free to go. “They can just go build in that other city that’s just like New York. Right?”

Steven Spinola, president of the Real Estate Board of New York, does not seem concerned. “There is nervousness any time there is change,” he told us. “There was nervousness when Bloomberg took office. There was nervousness when Giuliani took office, and Dinkins. I don’t think it’s any greater today. I have not heard de Blasio suggest anything other than demanding the most from developers for the assistance the city offers. What they may argue over is how much can be demanded.”